shaw bransford & roth case law update

Federal Circuit: Arbitrator’s Decision on Attorney Fees Award Requires Explanation

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Last week, the U.S. Court of Appeals for the Federal Circuit vacated an arbitrator’s decision denying a union’s request for attorney fees accrued in an arbitration proceeding since the arbitrator’s award decision failed to explain his reasoning for denying fees.

David Hamilton is a 20-year employee of the Equal Employment Opportunity Commission (“EEOC”), and has served as a mediator for the EEOC since 2014. In November 2016, Hamilton was in a mediation when he suddenly began to act erratically. Witnesses later testified that Hamilton used racial epithets and engaged in physical violence towards the parties in mediation. Witnesses also testified that Hamilton mistreated his coworkers and refused to follow orders from management officials. Based on his conduct that day, the EEOC proposed Hamilton’s removal. Hamilton replied to the proposed removal, and the EEOC removed him from his position on May 3, 2017.

Hamilton filed a grievance through his union, and the union took the case to arbitration. The arbitrator, appointed by the Federal Mediation and Conciliation Service, conducted a 2-day hearing. The EEOC called 11 witnesses, and the union called Hamilton. The arbitrator found that the EEOC did not prove certain aspects of its case, but credited the testimony of several of the EEOC’s witnesses regarding Hamilton’s behavior. The arbitrator found Hamilton’s behavior in November 2016, to be a one-time event in his otherwise “unblemished” career of federal service. The arbitrator found that Hamilton had a major physical and/or mental breakdown, something that the EEOC failed to consider. The arbitrator determined that the EEOC did not establish that it had just cause to remove Hamilton.

The arbitrator directed the EEOC to set aside Hamilton’s removal and reinstate Hamilton’s position with back pay and benefits. However, the arbitrator denied the union’s request that the EEOC pay the union’s arbitration costs and attorney fees.

Both parties petitioned the arbitrator for reconsideration of the decision. The EEOC requested the arbitrator reconsider reinstating Hamilton, and the union requested the arbitrator reconsider the portion of the award denying the union’s request for attorney fees. In response, the arbitrator reaffirmed the award, and denied the attorney fees. The union then filed a petition for review with the U.S. Court of Appeals for the Federal Circuit, challenging the arbitrator’s failure to award attorney fees.

On appeal, the court began by noting that where arbitration is provided for in a collective bargaining agreement, an affected employee has the option to invoke arbitration in place of an appeal to the U.S. Merit Systems Protection Board, and a fee award following an arbitration is available to a prevailing employee under the same circumstances that it would be available to such an employee following a successful appeal to the Board. The court further described that such an award is provided in accordance with the standards established under 5 U.S.C. § 7701(g). 

The court stated that under 6 U.S.C. § 7701(g), an adjudicator may require an agency to pay the employee’s reasonable attorney fees if the employee is the prevailing party and the adjudicator determines that payment by the agency “is warranted in the interest of justice.” The court utilizes the factors set forth in Allen v. U.S. Postal Serv., 2 M.S.P.R. 420 (1980), that an adjudicator may consider in determining whether a fee award is in the interest of justice. Those factors include whether the agency engaged in the “prohibited personnel practice;” the agency’s action was “clearly without merit,” “wholly unfounded,” or the employee was “substantially innocent” of the charges brought; the agency initiated the action against the employee in bad faith; the agency committed a “gross procedural error” which prolonged the proceeding or prejudiced the employee; and the agency knew or should have known that it would not prevail on the merits when it brought the proceeding.

The union made three arguments in its challenge of the arbitrator’s decision denying the request for fees. The union argued that the arbitrator was required to award fees under the Allen factors, the arbitrator improperly failed to apply the findings he made in his decision on the merits to the question whether to award fees, and the arbitrator’s failure to provide reasons for his decision to deny attorney fees requires the decision to be reversed.

The court addressed the union’s first argument, and held that the Allen factors did not require the arbitrator to award fees. Because the arbitrator found that a number of the EEOC’s allegations were supported by evidence and the record did not contain undisputed evidence that would have compelled an adjudicator to find that the Allen factors indisputably favored granted fees, the court stated that this was not a case that the record pointed so strongly toward granting a fee award that the court could reverse the adjudicator’s denial.

The court next weighed the union’s second argument, and rejected the union’s contention that in determining whether to award fees, the arbitrator could not consider any facts other than those that were included in his opinion on the merits. The court stated that several of the Allen factors involve issues that would not ordinarily be discussed in an opinion on the merits of an agency action against the employee. The court therefore denied limiting the arbitrator to the four corners of the merits opinion in determining whether to award fees.

The court then considered the union’s third argument that the arbitrator erred by failing to provide an explanation for his decision not to award fees. The court found that the union’s third argument “has more force.” The court stated that an adjudicator has a duty to articulate a rational explanation for each award. The court further provided that it is necessary for an adjudicator to provide some sort of explanation in an award decision for the court to be able to conduct its reviewing responsibility. Indeed, the court noted that although attorney fee awards are typically reviewed for an abuse of discretion, courts are careful to insist that the adjudicators responsible for the awards provide a sufficient explanation for their decisions to facilitate appellate review.

Here, the court found that the circumstances of the case require the adjudicator to provide an explanation for the reasons he denied the union’s request for attorney fees. As decided, the arbitrator’s failure to provide a reason for his decision denying fees left the court of appeals with no assurance which arguments made by the parties were adopted or rejected. The court therefore vacated the arbitrator’s award as to fees and remanded for the arbitrator to reconsider the issue of fees and to include a statement of reasons for whatever decision the arbitrator reaches on that issue.

Read the full case: AFGE Local 3599 v. EEOC


This case law update was written by Michael J. Sgarlat, Associate Attorney, Shaw Bransford & Roth, PC.

For thirty years, Shaw Bransford & Roth P.C. has provided superior representation on a wide range of federal employment law issues, from representing federal employees nationwide in administrative investigations, disciplinary and performance actions, and Bivens lawsuits, to handling security clearance adjudications and employment discrimination cases.

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